When Walker Information Inc.'s lease was up on its Keystone-area offices, it looked citywide for new space.
In February, the company signed a lease for space in a building along the North Meridian Street corridor because it got a good deal from Lauth Property Group Inc., according to Walker's broker, Samuel F. Smith, of Resource Commercial Real Estate.
Several area developers are betting that others will follow Indianapolis-based Walker's lead, lured by the prestige of a North Meridian Street address. At least three firms have announced plans for buildings that together would add more than 1.2 million square feet in the corridor, which runs along Meridian from 96th Street north to Carmel.
"[North Meridian] is the hot submarket these days," said Jennifer Burk, senior vice president of the Indiana office group of Duke Realty Corp., one of the developers building on Meridian. "It's where a majority of decision-makers, employees and associates of companies live."
Opus North Corp., known locally for developing industrial space, is making its first foray into the local office scene with a large park, dubbed Opus Landmark at Meridian, at 126th Street.
The company has controlled the 23 acres for about six years but didn't start development because brokers thought the location was "too far out there," said John Cumming, vice president with the local office of Chicago-based Opus North.
With the success of the Clay Terrace retail center at 146th and Meridian streets, Cumming said the location has matured.
So Opus will build a three-building, 350,000-square-foot office park. The first three-story building should be completed at the end of July. The project is 100-percent speculative, Cumming said.
Indianapolis-based Duke, which already has a significant office presence along North Meridian, is adding to its inventory along the corridor.
The company owns Hamilton Crossing and Parkwood Crossing. Both parks are more than 90-percent leased, Burk said, and Duke is now beginning work on Parkwood West at the northwest corner of 96th and Meridian streets. It plans three buildings totaling 570,000 square feet. The first of those is to be finished in August 2007.
Last, locally based Lauth Property Group has also begun development of Meridian Corporate Plaza Three.
The 135,000-square-foot building, which will be identical to another building opening this fall that is 85-percent leased, is being built on speculation and should open next summer.
Developers who've decided to build along North Meridian said the area has surpassed Keystone as the high-prestige location.
Large floor plates, easier access to residential growth in Carmel, and room for new construction make North Meridian excel, they said.
In the 1990s, the Keystone corridor was the leader in office space, followed by Meridian, but over the last five years the roles have reversed, said Jeff Henry, managing partner of the local office of St. Louis-based real estate firm Colliers Turley Martin Tucker.
The corridors have unique strengths that attract real estate investors, according to John Merrill, senior vice president of investment properties at the local office of Los Angeles-based CB Richard Ellis.
He said the regard given to a Meridian Street address and the corridor's closeness to executive housing mean a strong market that most likely will draw enough users to absorb the new space.
But the perks of Keystone-the shopping and dining available at the Fashion Mall-are still selling points.
"There have been, over the last several years, a number of tenants that have moved from Keystone to Meridian," Merrill said. "But there are those who would argue that [tenants] are now trying to find their way back because of the amenities [at Keystone]."
Recently, investors have paid top dollar to buy some of Keystone's premier office space. FSP Investments LLC, a subsidiary of Wakefield, Mass.-based Franklin Street Properties Corp., purchased One and Two River Crossing in mid-2005 for $41.6 million, while locally-based HDG Mansur paid $143 million to buy the 19-building Precedent Office Park on behalf of a private client in late 2005.
And Philadelphia-based BPG Properties Ltd. took full control of the six-building, Keystone at the Crossing complex in April.
New ownership means new pressure to land leases and a willingness to spend. For example, BPG has plowed $10 million into renovations, according to John Robinson, executive vice president of Meridian Real Estate, the exclusive leasing agent for Keystone at the Crossing. BPG consolidated ownership of all six buildings in April.